Revision for

ECONOMICS
FINAL EXAMINATION MAY 2020

AFY – 2019 JULY, AUGUST & OCTOBER

INTAKES
QUESTION AND ANSWER BOOKLET
Candidate must complete the following
Student ID Number: Student ID
Number:
Preferred Name: Preferred Name:

Teacher: Renuka Tick your Teacher: Sanjay Tick your

class class
July: 4 Oct: 3
Aug: 5

Time Allowed: 2 hours Reading Time: 10 minutes

Structure of Examination:
SECTION A: MULTIPLE CHOICE 20 QUESTIONS 20 MARKS

SECTION B: SHORT ANSWER QUESTIONS 4 QUESTIONS 20 MARKS

Directions to Candidates:
 Answer
SECTION all questions in this Question
C: MACRO-ECONOMIC ANALYSIS and Answer Booklet
1 QUESTION 30 MARKS
 You MUST write your student number on the FRONT of this Question and Answer
Booklet and any extra sheets of paper used. Should you require extra paper,
TOTAL 70ask the
MARKS
supervisor for it.
 Use blue and/or black ink pen only. Do not use pencil.
 You may use a scientific calculator. No electronic device that can photograph,
record, store, transmit or receive information is permitted in the examination
 Dictionaries and twink are NOT allowed.
 This booklet has 16 pages. Check that they are in the correct order.

Hand this booklet to the supervisor at the end of the examination

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 1
ECONOMICS
FINAL EXAMINATION MAY 2019
AFY – 2018 JULY, AUGUST & OCTOBER INTAKES

SECTION A – MULTIPLE CHOICE

[20 MARKS]
 This section contains 20 multiple-choice questions worth one mark each.
 Read each question and decide which is the best answer.
 Answer ALL questions.
 Record your answers on the multiple choice answer form at the end of this
paper.

1. Macroeconomics studies all of the following except the

A. determinants of inflation.
B. relative market share of Vodafone and Spark.
C. value of goods and services produced in NZ.
D. level of net exports between NZ and USA.

2. Devaluation of a country’s currency has the effect of

A. reducing the demand for its exports.
B. increasing the demand for its imports.
C. reducing the price of foreign currencies.
D. increasing the price of foreign currencies.

3. When the value of exports exceed the value of imports of goods, a country is said
to have
A. a trade deficit.
B. a trade surplus.
C. a budget surplus.
D. a budget deficit.

4. If the Price level has increased this indicates that the economy is experiencing
A. inflation.
B. disinflation.
C. deflation.
D. either inflation or disinflation.

5. The largest component of Gross Domestic Product in NZ is normallly

A. consumption expenditures.
B. investment expenditures.
C. government purchases.
D. net exports.

6. Saving and investment are, respectively

A. an injection and a leakage.

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 2
 B. wealth and income.
C. a leakage and an injection.
D. income and wealth.

7. The standard of living is measured by calculating the

A. Real GDP.
B. GDP.
C. GDP per capita.
D. Real GDP per capita.

8. If your teacher buys a new car for personal use then this transaction would affect:
A. consumption expenditure.
B. investment expenditure.
C. government expenditure.
D. none of the above.

9. An increase in the interest rate causes investment to

A. fall and the exchange rate to appreciate.
B. fall and the exchange rate to depreciate.
C. remains unchanged.
D. none of the above.

10. Researchers have found that countries that allow free International Trade tend to
A. grow more rapidly.
B. grow more slowly.
C. have more severe business cycles.
D. none of the above.

11. The rate of Economic Growth is best defined as the

A. increase in investment as a percentage of GDP over time.
B. percentage increase in nominal GDP over time.
C. percentage increase in real GDP over time.
D. percentage increase in the quality and quantity of resources.

12. Fiscal policy is the government’s budgetary tool which

A. regulates interest rates.
B. regulates the exchange rate.
C. alters its revenue and spending.
D. affects inflation in the long run.

13. The lowest priority as a government policy objective for any economic system is
likely to be
A. maximum employment.
B. economic growth.
C. a balanced budget.
D. economic stability.

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 3
14. Tax cuts do all of the following except
A. stimulate AD by increasing households disposable income.
B. reduce the governments budget deficit.
C. stimulates AS by improving workers incentives.
D. increase output in the short run.

15. Recession is a period of

A. positive growth.
B. balanced growth.
C. negative growth.
D. equal growth.

16. Investment spending is an important component of GDP because

A. it provides a higher standard of living.
B. it is a highly volatile component of GDP.
C. it is an important part of monetary policy.
D. All of the above.

17. Net exports is a negative number when

A. a nation’s export of goods and services exceeds its imports.
B. depreciation is greater than private domestic investment.
C. gross private investment is greater than depreciation.
D. a nation’s import of goods and services exceeds its exports.

18. Disposable income increases when there is an increase in

A. personal taxes.
B. transfer payments.
C. consumption expenditure.
D. personal taxes and transfer payments.

19. All of the above will shift the AD curve to the right except
A. an increase in government purchases.
B. a reduction in transfer payments.
C. an increase in export earnings.
D. a reduction in taxes.

20. The Net exports figure in Aggregate Demand could be

A. positive.
B. negative.
C. either positive or negative.
D. zero.

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 4
ECONOMICS
FINAL EXAMINATION MAY 2014
TAFY – 2013 JULY/AUGUST/OCTOBER INTAKE

SECTION A – MULTIPLE-CHOICE
[30 MARKS]
 This section contains 30 multiple-choice questions worth one mark each.
 Read each question and decide which is the best answer.
 Answer ALL questions.
 Record your answers on the multiple-choice answer form at the end of this
paper.

6. A limit on the quantity of goods that can be imported into a country is called:
A. a direct tax.
B. a tariff.
C. a quota.
D. an indirect tax.

7. Which of the following is not a fixed cost of production for a school in the short-
run?
A. Rent on the building.
B. Purchase of movie tickets.
C. Mortgage repayments.
D. Insurance payments.

8. Which of the following best describes the elasticity of a short run supply curve?
A. Inelastic.
B. Perfectly inelastic.
C. Perfectly elastic.
D. Elastic.

9. If the world price of apples is above the New Zealand price, with free trade New
Zealand will:
A. export apples and local production will fall.
B. export apples and local price will rise.
C. export apples and local consumption will rise.
D. import apples and local production will fall.

10. A single buyer of a product is called a:

A. monopoly.
B. monopsony.
C. monopolistic competitor.
D. perfect competitor.

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 5
11. The demand curve facing a perfectly competitive firm is:
A. identical to the marginal revenue curve.
B. perfectly inelastic.
C. identical to the total revenue curve.
D. none of the above.

12. For a monopoly, which of the following is incorrect?

A. AR = D
B. MC = S
C. MR = AR = D
D. AR > MR

13. By stopping a merger between firms that was likely to reduce the level of
competition, the government is acting in its:
A. allocative role.
B. regulatory role.
C. distributive role.
D. stabilisation role.

14. Which of the following goods are likely to be over-priced and under-produced by
the free market?
A. Alcohol.
B. Public transport.
C. Clothes.
D. Cigarettes.

15. Merit goods are under-provided by the market because the:

A. private sector will only produce private goods.
B. goods have a low price elasticity of demand.
C. government will supply merit goods.
D. market does not account for the merit of the good.

16. A natural monopoly can be beneficial for a society because it:

A. can provide the good at a low price.
B. is always very efficient.
C. earns normal profits.
D. will never set price too high.

17. Why does the government impose progressive income taxes?

A. Because the market fails to provide an equitable outcome.
B. To promote equity.
C. To promote efficiency.
D. To achieve inequality of incomes.

18. What the biggest individual component of New Zealand’s GDP?

A. Private consumption expenditure.
B. Net Indirect taxes.
C. Government expenditure.
D. None of the above.

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 6
19. Which of the following is normally associated with large increases in real GDP?
A. High inflation.
B. High unemployment.
C. High imports.
D. High crime rates.

20. The full employment level of GDP (Yf) is shown as:

A. a vertical line.
B. an upward sloping line.
C. a horizontal line.
D. a downward sloping line.

21. An increase in AD and AS will definitely result in:

A. increased inflation.
B. increased real GDP.
C. higher unemployment.
D. increased inflation and real GDP.

22. Given that the exchange rate is $1NZ = $0.75US, then the earnings for a New
Zealand exporter who earns $20,000US is:
A. $26,667NZ.
B. $15,000NZ.
C. $5,000NZ.
D. $13,333NZ.

23. An increase in the Official Cash Rate (OCR) will:

A. Increase AD.
B. Decrease AD.
C. Increase AS and AD.
D. Increase AS and decrease AD.

24. Which of the following is not the main function of the Reserve Bank of New
Zealand (RBNZ)?
A. Make loans to the public.
B. Supervise the banking sector.
C. Issue notes and coins.
D. Implement monetary policy.

25. The export price index divided by the import price index is equal to the:
A. balance of goods.
B. terms of trade.
C. trade weighted index.
D. exchange rate.

26. What is the effect of an increase in indirect tax on the market equilibrium for a
good?
A. Lower equilibrium price and increase quantity.
B. Higher equilibrium price and increase quantity.
C. Higher equilibrium price and decrease quantity.
D. None of the above.

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 7
27. If the Price Index was 132.5 at the end of 2012 and 140.2 at the end of 2013,
then there was:
A. Inflation.
B. Deflation.
C. Disinflation.
D. None of the above.

28. Fiscal policy affects macroeconomics performance by:

A. changing aggregate supply.
B. creating budget surpluses.
C. changing aggregate demand.
D. creating budget deficits.

29. An increase in a country's tariffs will:

A. not change its imports or exports.
B. increase both its imports and exports.
C. decrease its imports but not its exports.
D. decrease its exports and imports.

30. Which type of profit encourages exit of firms from an industry?

A. Supernormal Profit.
B. Subnormal Profit.
C. Normal Profit.
D. Economic Profit.

REVISION 1 for Final Economics Exam May 2020 July August October 2019 Intake Page 8